Quoted Price
Candlefocus EditorThe quoted price plays a role in security analysis, since it serves as one of the main factors in assessing a security's true market value. Market makers, who buy and sell securities to maintain a steady stream of liquidity, will use the quoted price to determine their own mark ups and mark downs. The quoted price then serves as the basis of all market transactions, providing valuable information to investors to discern whether they should buy, sell or hold a given security.
In addition, the quoted price of an asset can be used in strategies such as arbitrage and index fund tracking, both of which involve making a profits from price discrepancies between securities. By monitoring changes in the quoted price, investors can identify profitable opportunities for arbitrage or for making market index funds more efficient.
The quoted price is an instrumental, yet intangible, element of investing. The financial markets depend on using the quoted price of an asset as a reference point to buy, sell and trade securities, commodities, and currencies. It serves as a key factor in analyzing a security's performance and value, and in determining the markups and markdowns investors receive when they purchase a security. Successful investing requires a knowledge of what affects the quoted price and how to use it to make sound decisions.